Locked and Damned: Federal budget running dry for locks repair

$170 million a year spent toward $8 billion backlog



WASHINGTON, D.C. -- Each year, the deteriorating locks and dams used to transport about 550 million tons of coal, grain and other products on the nation's rivers increase the pressure to fix what the U.S. Army Corps of Engineers and industry officials agree is a broken system for maintaining the nation's aging river infrastructure.

Unfortunately, the federal budget process -- and the budget itself -- are just as broken.

That makes it difficult for those who maintain and use more than 200 locks along 27 U.S. rivers to imagine the government doing much more than it does now: funding an $8 billion backlog in repair and replacement projects at the glacial pace of $170 million per year.

At this rate, it will take 47 years -- about as long as a new lock or dam is expected to last -- to build projects authorized by Congress as far back as 1988.

In the meantime, the Corps has resorted to a triage system for maintaining fixtures long past their 50-year life expectancy. Those include the 105-year-old locks and dam at Elizabeth on the Monongahela River and a Depression-era lock upriver at Charleroi.

Under the current funding scheme, both facilities would be replaced in 2024 -- at the earliest. And if either fails before then, it could close the Mon to river traffic. A one-year closure could force consumers to pay as much as $1 billion in added electricity costs, a consultant told the Corps last year.

The river industry is clamoring to pay more to build modern, efficient locks and dams at a faster pace. Two years ago, barge operators offered to pay as much as 45 percent more in fuel taxes to provide more funding for projects.

But higher revenue from the fuel tax would require Congress to provide matching funding.

And Congress is dead set against tax increases and is not likely to have a change of heart in an election year.

"The sad reality down here is that nobody wants to pay for anything," said U.S. Rep. Mike Doyle, D-Forest Hills, whose district includes Elizabeth.

Barge industry officials heard that message loud and clear last month, when they descended on Capitol Hill for their annual political action day. The message came loudest and clearest from the freshman lawmakers elected in 2010, when Republicans took control of the U.S. House.

"They firmly stated they weren't elected to spend more money," said Michael J. Toohey, president and CEO of the Waterways Council, the industry group that organized the Congressional visits.

Industry officials and economists who measure the contributions that infrastructure makes to the economy say the money must be spent. The $8 billion for locks and dams is only one component of the nation's transportation framework. The American Society of Civil Engineers put a five-year price tag of $2.2 trillion on required infrastructure spending in 2009.

Governments have a hard enough time finding money to repair aging roads and failing bridges, projects that are easier to justify to taxpayers. But taxpayers do not drive on rivers.

"That pothole in the highway is more important to people than a lock failing," said Dale Roth, of the Carpenters' District Council of Greater St. Louis, whose members work on lock and dam construction projects.

Two years ago, a task force of more than 40 Corps and industry officials highlighted a major cause of the cost overruns that have pushed lock and dam projects decades into the future: the piecemeal funding provided by Congress each year.

They said when the Corps gets funding for projects upfront, as was the case with the $14.6 billion restoration of New Orleans following Hurricane Katrina, it can do the job right.

"The Corps can build on time and on budget," said Martin T. Hettel, the American Electric Power manager responsible for moving coal on AEP barges to the Columbus, Ohio, utility's power plants.

In recent years, only about $170 million has been available to replace or make major repairs on locks and dams. Most of that has been going to the Corps' No. 1 priority: a $3.1 billion project at Olmsted, Ill., that also has been hurt by piecemeal funding.

Half of the $170 million available each year comes from U.S. taxpayers.

The other half comes from a trust fund financed through the 20-cents-per-gallon tax barge operators pay on the diesel fuel they use.

Industry: Raise our taxes

The Corps-industry task force recommended increasing annual spending on lock and dam projects from $170 million to $380 million. The group estimated that would be enough to complete 25 major projects over the next 20 years, compared to six under the current funding scheme.

But getting to the higher number proved complicated.

The task force's proposal started by backing an increase for the diesel fuel tax for the first time since 1995, probably to 26 or 29 cents per gallon. Unless the 50-50 cost-sharing formula were changed, Congress would have to come up with funds to match the additional tax revenue.

Even at that new level, the tax would not bring in the $190 million needed to trigger matching funds to meet the $380 million target. That would require the tax to jump to 50 cents per gallon, and Corps and industry officials concluded that was not feasible.

So they recommended using revenue from the tax only to build new locks and for lock repairs costing $100 million or more. They also proposed limiting how much of the diesel tax revenue could be used to cover cost overruns.

Under the task force proposal, the federal government would contribute more to reach the $380 million target. It would be responsible for lock repair projects under $100 million and for all dam projects.

Corps and industry officials concluded using taxpayer money for all dam projects made sense because barge operators are not the only group that benefits from those facilities. Municipal water companies, hydroelectric companies, recreational boaters and industries that use river water also benefit from dams.

So far, Congress has not taken up the issue of raising the diesel tax and the White House has balked at other recommendations of the task force.

In a December 2010 letter to congressional leaders, Assistant Secretary of the Army Jo-Ellen Darcy wrote that the recommendations "could shift to the general taxpayer billions of dollars in costs that are currently, and appropriately, the responsibility of those who use these waterways."

Democrat President Barack Obama's proposed budget for the next fiscal year calls for raising $1.1 billion over 10 years by imposing fees on barges as they pass through locks. Industry officials believe Congress will not back those fees because they would fall heavily on areas where there are multiple locks. That includes Pittsburgh, which has 33 of the more than 200 locks operated and maintained by the Corps.

Meanwhile, U.S. Rep. Ed Whitfield, R-Ky., intends to introduce legislation that would adopt measures recommended by the Corps-industry task force. Industry officials would support such a bill, but they have their doubts about whether a majority in Congress will join them.

"We've got some folks who don't want to raise taxes no matter what people are willing to pay," said Stephen D. Little, co-chairman of the task force and president of Crounse Corp., a Paducah, Ky., barge operator.

"We do have a compelling story, and we're willing to pay more," he said.

The need to reform the funding system was reinforced this month by the revised $3.1 billion estimate for the Olmsted project. That figure is $1 billion higher than it was when Mr. Obama submitted his proposed budget last year.

The project was authorized by Congress in 1988 at an estimated cost of $775 million and was expected to be completed in 2000. The Corps now says it won't be finished until 2024.

"I personally have no confidence that number's going to stay at $3 billion," said Peter Stephaich, chairman of Campbell Transportation, a Houston, Pa., company that operates a fleet of 500 barges and moves about 20 million tons of coal and other commodities annually.

"We're trying to get them to change the way they do business in exchange for giving them more money," Mr. Stephaich said.

Industry officials are quick to point out that the Corps is not responsible for escalating costs caused by the way the projects are funded by the government.

Rather than paying for projects in full up front, Congress relies on annual appropriations. Instead of buying all the steel and other supplies it needs at one time, the Corps purchases limited amounts of materials. Depending on how much Congress provides each year and what weather allows contractors to do, construction workers and equipment are mobilized or demobilized.

"The projects need to be funded in whole and built nonstop. If they're built faster, they're less expensive," said Stan Lampe, president of Kentuckians for Better Transportation, a coalition of industry and government groups.

Dwindling trust fund

Politics also have something to do with the inefficient funding, one former Corps officer said. Retired Major Gen. Don Riley said there is "an inherent tension" between providing money for multiple projects to build support for the overall program and giving a limited number of projects enough money to complete them in a cost-efficient manner.

Those pressures were evident in 2002, when the balance in the trust fund financed by the 20-cents-per-gallon tax peaked at $412.6 million.

Congress approved a wave of new projects, focusing on "getting projects started, with less concern devoted to their future funding," according to the 2010 task force report.

Ten years later, the trust fund has a balance of $45.3 million.

"We need new ways of doing things here because the old ways aren't working well," said Carnegie Mellon University engineering professor David Dzombak, who heads a National Research Council committee examining the way the Corps does business.

Any hopes of addressing the funding problem rest on Mr. Whitfield's bill, which has yet to be introduced. Members of the Western Pennsylvania delegation said they would consider backing the measure.

"The choice is getting something done or running a huge risk of safety and commerce problems," said U.S. Rep. Tim Murphy, R-Upper St. Clair.

U.S. Rep. Jason Altmire, D-McCandless, said Mr. Whitfield's proposal would require Congress to provide additional funding based on increased revenue from the diesel tax.

"In the current political climate, what's the reality of moving something like that?" he asked.

The harsh budget reality is also on the mind of U.S. Sen. Bob Casey, D-Pa.

"We've got to be thoughtful when you have the kind of fiscal situation that confronts the country," he said. "We've got to be smart about how we invest."

Mr. Doyle said given the decaying projects on the Mon in his district, "I'll support any proposal that will address that and get [the work] done."

"It's not something, unfortunately, that we're going to pass in this session of Congress," he said.

And if not, the costs and risks triggered by a lack of funding will likely continue.

"That's something the Corps can't do anything about. It's up to the country to decide," Mr. Dzombak said.

"It's really up to the nation to decide what we want to do."


Len Boselovic: lboselovic@post-gazette.com or 412-263-1941. First Published March 21, 2012 4:00 AM


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